Loss to date: 4.2% Original entry point: Buy at £50.33, 19 October 2017
CRUISE OPERATOR Carnival (CCL) has gained positive momentum after reporting annual net revenue yields are expected to rise 3.5%, up from previous guidance of 3%.
Shares in Carnival have advanced 9.6% to £48.18 since our last update in June. Net revenue yield offers insight into how much money Carnival is making across its fleet, taking into account the number of rooms and the length of the cruise season.
Looking ahead, the company maintained its forecast annual earnings per share of $4.21 to $4.25 in the year to 30 November. Investors are likely to be relieved the guidance isn’t any lower after it was trimmed in June.
‘The key to the investment case is whether the industry can continue to deliver robust yield growth against the backdrop of accelerating capacity growth,’ comments Shore Capital analyst Greg Johnson.
We believe trading at Carnival remains robust and are not overly alarmed by the headwinds poised by higher oil prices and currency fluctuations, factors out of the company’s control. The stock will drop out of the Great Ideas portfolio soon as we only run them for 12 months, but we still rate it as a buy. (LMJ)